What Uber’s arrival to central New York could mean for local taxi companies
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The taxi cab concern that began several years ago with Uber’s rapid rise will burst out anew in Syracuse over the next few months.
Uber, along with its competitor, Lyft, will launch in Syracuse by June 29, after New York state lawmakers authorized such ride-hailing services as part of the 2018 fiscal year budget. Uber’s arrival to the area will likely create ripples through the transportation industry and agitate the local taxi cab market.
Uber, the world’s leading ride-hailing service, is spreading to more than 70 countries and gaining a valuation of nearly $70 billion, and its businesses continue to grow.
Its emergence leaves taxi companies grappling with how to compete in a tenser marketplace where, oftentimes, consumers can hop in an Uber with a few clicks on their phone — and at a much cheaper cost than that of a traditional cab.
When Amann Thakur heard a few months ago that Uber would probably enter the Syracuse market, he swapped his business model from taxi service to black car. Thakur, who started his cab service Quality Cabs & Transportation about five years ago, intends to differentiate his services from ride-hailing by offering a more luxurious ride.
About 90 percent of his business is students, most of which comes at night, he said. He prides his service on clean cars and efficiency, and he said he thinks Uber won’t impact business down the road.
“You have to accept the change in your mind,” Thakur said. “It’s an easy transition then. When kids are dead drunk, however dressed, I make sure they get home. I’ll drop them right at their home, even if they don’t tell me to. It’s not a business. It’s a friendship.”
Several Syracuse University professors who study business and economics said it’s measures like those that many cab companies will have to take to survive.
“This is a major game-changer,” said Alex McKelvie, chair of the department of entrepreneurship and emerging enterprise in the Martin J. Whitman School of Management. “It’s a benefit to consumers. To incumbents, taxi companies, they’ll have to adjust and be more innovative.”
Uber charges less, thanks to legal loopholes, and limits car crashes and death by encouraging rides with the company, rather than people driving home themselves. Uber is also exploring self-driving cars, which it hopes one day will be profitable by eliminating the cost of paying drivers.
Usually, there’s more jobs added than lost when Uber comes to town, experts said. An Oxford University study found that Uber’s emergence results in a 50 percent rise in the number of self-employed drivers in the city. Whether that plays out in central New York will remain to be seen.
“If you live in a large city, you’re used to taking taxis and paying for a short ride,” said Scott Lathrop, a professor of marketing in Whitman. “Consumers in this Syracuse market may take a longer time to warm up.”
One thing most everybody has agreed on is the addition of ride-hailing services equates to greater consumer satisfaction. Individuals in the area now have a convenient part-time job for supplemental income, and the public gets more choice in transportation when going from point A to point B.
Alfonso Flores-Lagunes, an economics professor at SU, said there is a shortage of available cab rides in Binghamton and Syracuse. Uber will help lessen that gap or take it out completely, he said.
“It’s overdue and badly needed,” Flores-Lagunes said. “It was artificial the way the whole of upstate New York had not had this. The sharing economy allows us to increase the labor supply and is generally positive overall.”
Uber can create tax revenue for local government. Arrest rates for drunken driving dropped between 15 percent and 62 percent after ride-hailing services such as Uber and Lyft entered the marketplace, according to a 2016 study by professors at Providence College and Stonehill College.
Whatever sort of clash cab companies are met with, maintaining market share will be anything but easy.
“They’ll need to react,” McKelvie said. “Those who don’t adjust may disappear.”
Published on June 9, 2017 at 10:00 am